I wanted to further explain how low expenses lead to early retirement by taking a look at a case study.

Be a Super Saver

Let’s explore the lives of two fraternal twins, tragically torn apart at birth (not in the separating conjoined twins sense, but rather in the figurative sense). To protect their true identities, I have carefully crafted cover identities. Each sibling led similar lives. They went to college, studied engineering and obtained good jobs right out of college at age 21 earning $60,000 per year.

I decided to take the plunge into the world of all-in-one personal finance and investing software. Some folks use Quicken, Mint, or Wealthfront. I looked at all of those, and tried some but they didn’t quite do what I wanted to do. They were either too clunky, cumbersome and time consuming to use, or they didn’t get the investment management part done correctly.

Enter Personal Capital. This is a slick web site that makes managing your finances and investments quicker, easier, and prettier. All your credit cards, checking, banking, investments, 401k’s, IRA’s, and other accounts are in one place, conveniently summarized.

Buying a brand new car has to be one of the worst financial decisions a person can make. I’ve said this before and I continue to harp, even though I know it sounds a tad… oh what’s the word… hardline? Crazy? Like a frugal evangelist? Nevertheless, I persist because it’s one of those purchasing decisions with the power to impact your longterm financial health in a profoundly negative way.

When we started working to pay off our consumer debt, we began by going through every single line item in our budget. The goal was to determine which expenses were truly value expenses in our life, and which were merely temporary, feel-good expenses that were hindering our ability to become debt free.

Some of the items that we decided were no longer worth spending our money on (in terms of a greater goal) were:

cable TV

magazine subscriptions

dance lessons for the girls

eating out at restaurants

trips to the beauty salon

weekly dates with the kids to local restaurants

The cost of these things was really adding up, and that was evident by our continuously rising credit card debt. When we finally opened up our eyes to our dwindling net worth, we decided that it was time to discover what we truly valued in life and what we didn’t. The money we were spending on things that weren’t a true value to our lives then were redirected to more important stuff, like paying off debt.

Let’s face it, you are most likely part of the 80% of the American population that is currently making a monthly loan payment. Between student loans, a home mortgage, car loans, and the exercise machine you bought on sale in January, it can be nearly impossible to not borrow money at some point in your life. While going into debt is often viewed a normal facet of life, most people do not realize how debt can destroy your chances of financial freedom and living the life you truly desire.